After the bear market of 2022, followed by some relief in 2023, market participants expected another bull market in 2024 like in 2021. The markets woke up to some extent but largely focused on the flagship token Bitcoin. The markets remained high in the first quarter, bringing a massive bearish influence that dragged down not only the BTC price but the entire crypto market.
The question now is whether the crypto markets will experience another bull run like in 2021.
One of the main reasons for the BTC price surge in Q1 is said to be the launch of the spot BTC ETF. With the entry of institutions into the cryptocurrency, retail investors have partially withdrawn from the markets. Institutions accumulate BTC now and then, but the market volatility has decreased, which largely depends on retail investors. However, these traders seem to have stopped actively participating, which raised pessimistic and uncertain clouds over the markets.
One of the most sought-after analysts, Miles Deutscher, explains in a thread the reasons why retailers may have exited.
The analyst mainly focuses on answering the question: Where is retail trading currently? Will it ever return to cryptocurrencies? He looks at the price trend in 2021-2022 and gives 5 reasons why altcoins will not take off like they did in 2021.
- The main driver of the 2024 rally was the BTC ETF, which is very different from the previous one, namely the macroeconomic conditions.
- The normal liquidity flow before ETF was Bitocin-Ethereum-Large Caps-Altseason. However, since the liquidity is channeled directly into the ETFs, there is no direct liquidity flow into altcoins, which changes the market dynamics.
- Altcoins have significantly underperformed this cycle as their dispersion has peaked. The reason for this could be that there are too many releases but very few are receiving the required liquidity.
- During the 2022 bear market, many retail traders suffered huge losses and sustained major damage, both physical and reputational.
- As a result, fundamental belief in cryptocurrencies has declined as traders believed in long-term investments before 2021 and are now looking for short-term gains.
Retail traders had entered the market in March but stayed there for a short period of time. Since then, altcoins have been stuck in a steep downtrend. However, they could return if the Bitcoin price rises above $73,750 and forms a new all-time high. Moreover, a rise to $100,000 could revive interest in cryptocurrencies overall.